1. Economic Outlook for 2010 Prof. Steven Kyle Cornell University December 8, 2009

2. Growth Prediction: “ … no growth at all. Far more likely is a decline of 1-2% in GDP, with even worse performance if there are additional negative shocks or if the stimulus package is delayed or too small to be effective” Actual outcome: 2008 Q4 -5.3% 2009 Q1 -6.4% 2009 Q2 -0.7% 2009 Q3 2.8% Overall -2.4%

4. Unemployment Prediction: “the current 6.7% unemployment will easily reach 8% next year with 9 or even 10% not out of the question depending how good or bad the growth performance is” Actual outcome : 10.0% U6 (includes part time & discouraged): 17.2%

6. Interest Rates Prediction: “ … the Fed will keep rates low as long as growth is in the tank” Actual Outcome: Interest rates were near zero a year ago and they still are

8. Inflation Prediction: “Inflation is not something we need to worry about. Deflation is even a possibility though not likely given a large stimulus package.” Actual outcome: Inflation has remained low – well under 5%

10. Exchange Rate Prediction: “it is hard to see the dollar strengthening much more than the current mid 1.20's against the euro. The huge flood of US paper hitting the markets will tend to weaken the dollar over the next year...” Actual Outcome: Dollar/Euro now about 1.50

12. Federal Deficit Prediction: A year ago I said that fiscal deficits were huge in 2008 but “you ain’t seen nothin’ yet” Actual Outcome: Amen. Deficit reached about $1.4 trillion

13. Housing Market Prediction: “we have yet to see the bottom of the real estate market: Housing prices still have not fallen into normal historical ranges of ratios such a home prices to income or prices to rent while commercial real estate is only now starting to decline. The continuation of this into next year will provide further downward impetus as the economy contracts.” Actual Outcome: Market has indeed continued to fall and CRE has followed